Spring is often considered a time of renewal — a time to ditch the old and welcome the new.
And while you may be thinking of spring-cleaning your home or your wardrobe, why not take a fresh look at your finances, too? If you’re not sure where to start, don’t worry.
We’ve got you covered with these eight tips for managing your finances:
With 2016 in full swing, spring is a great time to take a good hard look at your budget. Has anything changed since January when you set your 10 financial goals? Perhaps you earned a raise at work, or took the plunge and purchased your first condo or house. If so, revisit your budget to ensure it reflects the new numbers.
Budgets may seem time-consuming, but think of it as having a spending plan in place so that you know exactly where your money is going. Look at your current income and expenses, and make sure each dollar is accounted for and that your budget represents both your short- and long-term goals. In other words, budget for things like that summer vacation, retirement and for a rainy day.
Tip: You can use BMO Manage My Finances to effortlessly track your income and expenses.
Did you start the new year feeling pumped about paying off debt, but you’ve since lost your motivation? Spring is the perfect time to check in on the state of your debt and rejuvenate your enthusiasm for paying it off. Start by reassessing your debt:
- How much do you owe? List your balances, interest rates and lenders in a spreadsheet.
- What is your minimum payment on each loan?
- How much can you afford to pay toward debt each month?
Commit to paying off high-interest debt first and create a plan of action, including fun rewards for your efforts. Paying off debt can’t be all about deprivation, so be sure to budget in some fun to sustain motivation and avoid debt fatigue. You’ll feel great as you figure out how to manage your money and regain control of your finances.
Tip: Paying off high-interest debt first will save you more money over time, rather than focusing on the smallest balance.
It’s recommended that you get an annual physical for your health, so why not get a financial check-up once a year, too? Set aside time to review and audit your accounts. Are there any subscriptions you are no longer using? Are you paying additional fees for any services you use? Do you have any accounts or services that are sitting dormant? Now is the time to comb through your accounts, and find out where you can cut down on costs.
Tip: If you signed up for free trials earlier in the year, now’s a good time to decide if you want to cancel or continue your subscriptions.
Your credit is an important factor in your adult life. It can determine whether you get approved for a mortgage, a car loan, and even a credit card. In order to make sure your credit is healthy and there are no errors, check your credit report as part of your spring cleaning routine.
Tip: If you find any errors on your credit report, be sure to dispute them before applying for anything where your credit will be checked.
The simplest way to save? Set up automatic withdrawals. Consider scheduling biweekly or monthly withdrawals to help you contribute to your long-term savings, whether it’s through your Tax-Free Savings Account (TFSA), your Registered Retirement Savings Plan (RRSP) or both. Even starting with a small amount, say $50, will help. Then you can gradually save more as you become motivated by the size of your savings.
You can also streamline your finances by setting up automatic payments for your recurring bills. Set your due dates to coincide with pay day so that you have enough money in your account and keep tabs on what’s coming in and out of your accounts, so you’re not in for any surprises.
Tip: Consider saving at least 10 per cent of your gross income.
Everyone’s not-so-favourite time of the year is right around the corner: Tax time. Doing your taxes can be a headache, but with some preparation and organization, you can make the process a little less hectic. Gather your T4 slips and any receipts related to any charitable donations or RRSP contributions. Getting started now means you’ll get your taxes done that much sooner!
Tip: Check out our checklist for filing your taxes.
Now is the time to make sure your bases are covered in the insurance department. Sure, you have your health care covered, but what about everything else?
If you’re a renter, you may want to consider tenant insurance. If someone gets injured in your apartment or if there is damage to your place from an incident, you may be liable for expenses. Having tenant coverage can help cover costs for those tricky, unforeseen situations. If you have a family or are the sole income-earner, you may want to opt for life insurance coverage in order to protect your family should anything happen to you.
Tip: Be sure to shop for the best rates and read reviews before picking a type of insurance coverage.
Spring cleaning is all about purging and organizing, and you can do the same with your financial paperwork. Create a folder for all of your important financial documents, bank statements, tax returns and more. If you have old bank statements or outdated account information, it’s time to shred!
Tip: Get in the habit of filing important paperwork throughout the year (or opt for paperless statements and bills), so that you can keep your finances organized beyond spring.
If you have any questions about managing your personal finances, or are looking for general personal finance advice, make an appointment at a BMO branch near you.
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